Erstwhile mechanical engineer and Forbes Executive Editor, with MBA from NYU. In 15 years at Forbes I covered large corporations, money managers and self-made wealth builders---and the myriad trials they all face. Joined the tech-startup ranks in 2014 as co-founder and CFO of Eyes/Only, a luxury-experience portal for high-net-worth individuals. If the mood strikes (and especially if you have a tasty-tequila rec), please send your thoughts to brett@eyeson.ly.

America's Most Promising Companies: The Top 20

These short cuts are understandable given the effort, resources and skill deeper due diligence requires—not to mention the abiding fascination with rankings, however unenlightening they might be.

How, then, to find hidden gems with scintillating prospects?

To sharpen our search, FORBES teamed up with CB Insights, a New York City-based data firm that tracks investment in high-growth private companies. With $650,000 in grants from the National Science Foundation, CB Insights has developed complex software called Mosaic to help lenders and investors dole out capital more efficiently. We married Mosaic’s data-crunching with old-fashioned reporting to assemble a list of up-and-comers with big growth potential.

Mosaic mines data from 30,000 sources (from press releases and social networks to job boards and court filings) to come up with one score that measures a company’s potential. Think of it as the SAT score for private companies—something that lenders, investors and vendors can use to quickly gauge whom they want to do business with. “Five years from now we expect Mosaic will help the best private companies access capital at more favorable terms and win more customers,” says CB Insights cofounder Anand Sanwal, 38.

Mosaic’s algorithms look at a host of signals that collectively paint a picture of a company’s health. Example: If turnover in the management ranks is ticking up, that’s a negative signal. A new distribution deal with a large strategic partner is a favorable signal. The hard part: extracting all those “digital footprints” (job postings, product reviews, press reports, debt filings—all in different digital formats) and assembling them in a meaningful way.

There are two powerful advantages to this approach. First, aggregating data from thousands of sources would take far too long to do by hand. Second: “Mosaic assesses these dimensions not just on an absolute basis but relative to competitors,” adds Sanwal. “It implicitly considers relative performance.”

Our hunt began with a free online survey. Entrepreneurs could nominate their own companies or be nominated by those familiar with their businesses (lawyers, accountants, p.r. types). Contenders had to be privately held, for-profit, stand-alone businesses (as opposed to divisions of bigger firms). Companies that hadn’t yet generated revenue but had compelling business models were given a look, too.

(To encourage participation, we offered contenders the chance to be selected to attend a two-and-a-half day small business bootcamp at Aileron, in Dayton, Ohio, established by billionaire pet food titan Clay Mathile. Scroll down to the Video section of the America’s Most Promising Companies lander page to see Mathile conduct one-on-one mentoring sessions with four AMPC list members. Click here for highlights from our own 90-minute chat with Mathile.)

Using the Mosaic score as a preliminary ranking, we honed the list by gathering additional data via a second, more detailed survey (also free) to get a better sense of each company’s growth potential. We asked for annual revenue and the number of employees for 2008 and 2010, and estimates for 2011. (Companies had to verify existing revenue via a corporate tax return or an accounting opinion letter from an independent accounting firm.) We also took into account the size of the addressable market, the strength of major competitors, the experience of the management team, any significant customers and strategic partnerships, the amount of outside capital raised and how much of the founders’ own stash was on the line (the more the better). Then we spoke with representatives of each company to confirm the information and get additional color on their operations.

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